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Should Business Ethics Be Different in Transitional Economies?

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Abstract

This paper builds on a debate between Velasquez and Fleming: Do multinational enterprises (MNEs) have ethical obligations to their host countries? Velasquez applies Thomas Hobbes' realism approach in arguing that MNEs have no special moral obligations to host countries: (a) obligations do not exist independently in a "state of nature," (b) MNEs exist in a "state of nature" independent of any sovereign authority or power, (c) therefore, MNEs cannot be compelled toward moral or ethical behavior.

Fleming counters that the lack of an international authority to compel morality from MNEs is irrelevant. MNEs are for-profit entities making rational economic decisions based on their perceived self-interest. Since they operate in "the goldfish bowl of international media," MNEs are very aware of the stakeholder model.

First, the paper supports Fleming's position: Even if a philosophical case cannot be established for MNEs to act ethically – they still should. Being unethical in any arena, but especially in the international arena, is both bad-for-business and bad business. Applying stakeholder theory, if stakeholders perceive the MNE as unethical (which may or may not be true), the firm will ultimately lose business.

Next, the paper applies Fleming's position to transitional economies. As economies shift from one system to another, positive perceptions and stakeholder support are required for success. With so many environmental variables in flux, multinationals must promote a sense of normalcy, of regular ethical habits, of familiarity. Finally, the paper concludes by cautioning a sole reliance on stakeholder analysis – especially in turbulent times – and recommends areas for further research.

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  1. California State University Channel Islands, One University Drive, Camarillo, CA, 93012, U.S.A.

    William P. Cordeiro

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Cordeiro, W.P. Should Business Ethics Be Different in Transitional Economies?. Journal of Business Ethics 47, 327–334 (2003). https://doi.org/10.1023/A:1027314019323

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